Yong Seong Investment previously controlled 66.96% of the Company. Yong Seong Investment had purchased 1,191,000 shares at an average price of $0.823/share (total 178,800,000 shares in the capital of the company).

How do we view this?

Previous time Management purchased shares in the Company was February 2016.

Yong Seong Investment had purchased 1,461,000 shares over two days at an average price of $0.437. The share price had subsequently rallied more than 150% within two years, as at February 2018.

Expect to see a price floor at S$0.82.

We believe this purchase by Management sends a positive signal to the market that they are willing to buy at this price level. As such, we expect to see a price floor at S$0.82. Since our previous report last week (Sept. 3), the share price has pared about half of its fall, following the surprise 4Q FY18 loss.

Investment Action: Maintain BUY, unchanged target price of $1.03

The outlook is positive. New projects of the sludge treatment facility and Pasir Ris-Bedok public waste collection contract start contributing in 1Q FY19.

Our target price gives an implied FY19e forward P/E multiple of 13.0x. As FY19e is transitional, we think that FY20e is a better representation of a normalised full year. We estimate 8.18 cents EPS and 7.84 cents free cash flow per share in FY20e.

The current price of 86.5 cents/share is 11.0x of FY20e free cash flow per share and gives a 2.3% dividend yield (based on our FY20e assumption of 2 cents).

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